It's funny because my dad (a computer science professor) has been telling me for about 10+ years that he believes that browsers will eventually replace OS's. I always told him that that made no sense. I'll have to show him this. He seems to envision the future much like Google does, and he may be right too. I tend to predict consumer trends poorly, or at least not follow them. e.g. I don't like wireless. I find it unreliable, slow, and annoying and prefer to wire my house with gigabit ethernet ports than use wireless and carry cables. He is the opposite... he even bought wireless/bluetooth mice, keyboards, printers, etc.
I suspect the non-poweruser public would find the idea of everything being always available, no matter where they are, appealing, and the need to run things outside of a browser would not be big for some people who just websurf, email, and run office programs. Google can easily get all that into the cloud. I do suspect this is where everything is going, although I'm not sure I like it.
I expect this will eventually be the beginning of the end for Microsoft. I'm a well known MS hater around here, but I really do believe that there is no future in closed source proprietary software for ultra common tasks, like OS's, word processors, spreadsheets, email programs, etc. If a programmer wants to get paid, he'll be writing web pages or proprietary applications for a specific purpose. (e.g. If Coke uses some kind of system to track orders and shipping of bottles, good luck finding that in the Gentoo repositories...)
Most programmers work on in house apps anyways... that wouldn't change that much.
I think Google will do quite well in the netbook market, for people who want cheap, reliable, secure, and simple on their netbook and who like the idea of cloud storage. Also, if you tell people it's Linux, they get all scared and run away screaming, even though Linux has come so far from those days of having to compile all your own software, write your own config files, etc. If you say the OS is by Google, people will trust the brand name and try it, and you can count on Google making it easy and making it "just work." That is something people will give up versatility and power for, especially if they don't use the power in the first place. Netbooks are by far the fastest growing sector of the market. I bought one about a year ago (Dell Mini 9) and I use it more than any other computer now, as I can bring it around the house, sit in bed, watch TV on the couch, whatever, and most of what I do doesn't need power. When I need more power, I just go use the quad core. My friend has only a netbook (eee) and it works fine for her. She is a grad student, so I'm sure price is part of that, and not a techie (she can and does use tech well, she just doesn't isn't interested in technology for its own sake).